November 2014 Manufacturing ISM Report On Business - PMI At 58.7%

December 1, 2014

New Orders, Employment and Production Growing; Inventories Growing; Supplier Deliveries Slowing

Economic activity in the manufacturing sector expanded in November for the 18th consecutive month, and the overall economy grew for the 66th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcob, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.  "The November PMI registered 58.7 percent, a decrease of 0.3 percentage point from October's reading of 59 percent, indicating continued expansion in manufacturing.  The New Orders Index registered 66 percent, an increase of 0.2 percentage point from the reading of 65.8 percent in October.  The Production Index registered 64.4 percent, 0.4 percentage point below the October reading of 64.8 percent.  The Employment Index grew for the 17th consecutive month, registering 54.9 percent, a decrease of 0.6 percentage point below the October reading of 55.5 percent.  Inventories of raw materials registered 51.5 percent, a decrease of 1 percentage point from the October reading of 52.5 percent.  The Prices Index registered 44.5 percent, down 9 percentage points from the October reading of 53.5 percent, indicating lower raw materials prices in November relative to October.  Comments from the panel are upbeat about strong demand and new orders, with some expressing concerns about West Coast port slowdowns and the threat of a potential dock strike."

Manufacturing expanded in November as the PMI registered 58.7 percent, a decrease of 0.3 percentage point when compared to October's reading of 59 percent, indicating growth in manufacturing for the 18th consecutive month.  A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 43.2 percent, over a period of time, generally indicates an expansion of the overall economy.  Therefore, the November PMI indicates growth for the 66th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 18th consecutive month.  Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (55.8 percent) corresponds to a 4.2 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for November (58.7 percent) is annualized, it corresponds to a 5.1 percent increase in real GDP annually."

Of the 18 manufacturing industries, 14 are reporting growth in November.

Source: Institute for Supply Management